A Crude Awakening – Adapting to the New Norm
By Neil Gordon, Chief Executive of Subsea UK
It is increasingly clear that the current oil crisis is fundamentally different in comparison to previous downturns. While no one can say how long the crisis will last, when looking at oil price trends over the years since the 1920s, it becomes apparent that apart from the cyclical spikes every few years, $100 plus was never going to be the norm.
However, this is the new norm and the recovery is much more about how we deal with the current price. Conditions are creating both challenges and prospects - those who realign multiple aspects of their business and work hard to drive change will be best placed to take advantage of these opportunities.
That’s why the theme for Subsea Expo 2017 is “Adapting to the New Norm”. The event will focus on the behavioural changes the industry must make to deliver the cost savings and efficiencies needed to sustain the sector for decades to come.
While I am in no doubt that there will be tough times ahead in the short-term, I do believe the subsea industry in this country is in a strong position to embrace the new market reality and, indeed, can capitalise upon it, largely because of our focus on technology and innovation.
Despite the drop in sales and confidence in the industry, the UK subsea sector is maintaining high levels of investment in technology. In our recent snapshot survey of members, almost 80% of respondents reported that they were still investing in new technology to secure long-term future growth.
Underwater technology, systems, and processes made in the UK have been helping North Sea operators recover hydrocarbons since the 1980s, and now is not the time to stop. Companies need to figure out how to best structure and allocate resources so that novel ideas and much needed solutions can be quickly identified and implemented. The focus must be on developing technology that will deliver efficiencies and add real value to the industry.
However, with fewer discoveries and ageing fields, operators are increasing production by using existing, less mainstream technologies that can be readily implemented to enhance and upgrade ageing subsea systems.
Devising smarter ways of applying these technologies can also reduce inefficiencies and counter the tendency towards over-engineering, which became a feature of the high cost, high oil price environment.
This doesn’t mean that new technologies are no longer needed. In order to extract higher yields from our existing assets and to do that viably we need to develop new technology and smarter integrity solutions that keep these ageing assets healthy.
Smart collaboration, coupled with smarter applications of existing technologies, along with new innovations will help secure the subsea sector’s future and the sustainability of our industry in the new norm.
I think it’s clear now that short-term measures are not the answer this time around. Deeper, more fundamental change is required across the industry.
We can’t ignore the real changes that are happening in the world. It’s time to step up to the plate, adapt to the new environment and adopt a fundamentally different mind-set. It’s about making things simpler, safer, and more efficient today to deliver lasting results for decades to come.
With a much greater industry focus on technology, investment in organisations like NSRI, OGIC and OGTC and a commitment on small pools led by the OGA, we have a fighting chance to re-establish ourselves firmly as leaders in innovation and technology and pioneers in mature provinces.
During the North Sea subsea boom, it was easy to get lured away from internationalisation strategies and plans and focus on the work on our doorstep. While the potential of the North Sea still represents a major prize which the subsea industry must get after, the greater, longer-term prize lies in international waters.
If the UK subsea industry can rise to the challenge of solving the North Sea’s problems, while positioning itself in key overseas markets as proven problem solvers, we won’t only survive, but we will succeed and grow.